VW subsidiary makes $2.9 billion bid to acquire Navistar
A subsidiary of German automaker Volkswagen has made a bid to acquire Lisle-based truck manufacturer Navistar International for $2.9 billion in an all-cash deal.
Navistar officials confirmed Thursday that Volkswagen's heavy truck subsidiary Traton SE has made an offer of approximately $35 per share. Navistar said in a statement its board of directors will evaluate the proposal "in the context of Navistar's strategic plan" to see if the offer is worth accepting. The company declined to further comment.
VW has had its eyes on the U.S. truck maker for a while, acquiring a 17% stake in the company in 2016 and expressing interest in acquiring the company in order to compete with global truck manufacturers Daimler and Volvo. The company pondered increasing its stake in Navistar in 2018 in order to trigger a mandatory takeover offer, but backed off that idea.
The swoop for Navistar, which was first reported by Bloomberg News, would reduce the reliance of VW's heavy-truck unit Traton on Europe and South America.
VW's heavy-truck division was created from acquisitions of Germany's MAN and Sweden's Scania. The unit had for years struggled to combine the operations before hiring former Daimler executive Andreas Renschler, who successfully spearheaded a partial listing of Traton last year.
While the deal could help the company vie with Daimler and Volvo in North America, heavy-truck makers are preparing for a downturn after years of growth. Navistar, truck-engine maker Cummins Inc. and supplier Meritor Inc. announced thousands of job cuts late last year.
If a deal closes, VW will take over a company in the midst of a fix-it job. Navistar said in December it will reduce employment by 10% and cut its 2020 revenue forecast to a range of $9.25 billion to $9.75 billion, below analysts' lowest estimate.
Navistar's biggest shareholder is billionaire investor Carl Icahn. It's unclear whether VW's offer will satisfy Icahn, 83, and Mark Rachesky, the founder and chief investment officer of MHR Fund Management, which is Navistar's third-largest shareholder with a 16% stake.
Navistar International produces the International brand of commercial trucks and IC Bus brand school and commercial buses. as well as its own line of diesel engines.
Bloomberg News contributed to this report.